Australia and India are starting to put their decades-old differences behind them

Australia and India both mark their national holidays on the same day – 26 January is Australia Day to the south-eastern extremes of the Indian Ocean and Republic Day on its northernmost shores. The two nations also share a national sport in cricket and Commonwealth membership. And, increasingly, they share a willingness to forge mutually beneficial bilateral ties. Differences forged in the Cold War and enhanced by divergent views towards nuclear non-proliferation are being steadily erased by a desire for greater cooperation on common goals and closer trade links.

India is, according to Australian Minister for Trade, Simon Crean, ‘Australia’s sixth largest and fastest growing major export market’, with exports rising from just over $2.5 billion in 2002-03 to just under $9 billion in 2006-07. In the same period, imports from India jumped from $978 million to $1.4 billion, with the gap attributable to Australian raw materials and education services.

Furthermore, while Australia’s projected growth is currently less than one per cent due to the global financial crisis, India’s High Commissioner to Australia, Sujatha Singh, believes her country’s economic fortunes are far more robust: ‘We expect to achieve a growth rate of about seven per cent this year, which will be among the highest in the world.’

But there is far more to India – and the Australian-Indian relationship – than mere trade figures and growth forecasts.

‘I am seeing India as both a changing country and rising power, [and] also as a potential partner for Australia,’ says Rory Medcalf, Program Director, International Security, at the Lowy Institute, and coordinator of the high-level Australia-India Roundtable. ‘There is just so much potential there, and it is probably the only relationship Australia has with a major power that is far less than its potential.’

Medcalf argues that Australia hasn’t yet ‘made the leap into India’s top, trusted tier of partners’ and has identified a number of areas in which he believes closer strategic ties should be forged between the countries. These include ensuring the balance of power in Asia remains stable, coordinating responses to natural disasters and climate change, countering terrorism and jihadist ideology in Pakistan, Afghanistan, Bangladesh and South-East Asia, and limiting the further spread of nuclear weapons and missiles.

Beyond that, he says there are three key areas in which Australia and Australian businesses and organisations can work with India.

Education

There are over 80,000 Indian tertiary students in Australia, making it second only to the United States as the preferred overseas destination for university students. Additionally, Australian universities are strengthening links with their Indian counterparts through initiatives such as the joint-venture research academy between Monash University and the Indian Institute of Technology in Bombay (IITB), which Monash University Vice-Chancellor Professor Richard

Larkins calls ‘an extremely important investment for Australia and Monash given the number of multinational companies operating in India.’

There is also growing interest in both countries to provide India with more exposure to Australia’s vocational education system, and Medcalf believes that by helping India fill its own gaps in education, there will be considerable benefit for Australia, ‘whether it is financial benefits, economic benefits or more intangible political benefits.’

Infrastructure

A BusinessWeek report in 2007 declared that India’s ‘economic boom is being built on the shakiest of foundations’, yet there is also recognition that this ‘infrastructure deficit could yield huge opportunities’ for overseas corporations. Much has been made of the parlous state of India’s roads, bridges, airports, power and water systems, with foreign companies invariably setting up new manufacturing plants in China rather than India as a result.

However, Medcalf says this situation is now changing, citing the deregulation of the airports – ‘an important change. not just a symbolic one’ – as evidence. He believes that if infrastructure can continue to develop, and sufficient deregulation proceeds in other areas, ‘there is no question in my mind’ that more and more Western companies will move into India.

Energy

Coal and copper are Australia’s biggest exports to India, thanks largely to the fact that India’s energy is coal-driven and its indigenous coal supply is low in quality. However, as Medcalf points out, ‘nuclear [energy] is the anticipated growth area in base-load power production’, which has created a political headache for the Australian Labor Party (ALP).

In August 2007, then prime minister John Howard reached an agreement with his Indian counterpart, Manmohan Singh, that Australia would export uranium to India, provided it was used ‘for peaceful purposes’. Unwilling to alienate elements within his ALP, Kevin Rudd immediately announced he would reverse that policy if elected. True to his word, Rudd did so on becoming prime minister, leading to an outpouring of trenchant criticism in the Indian press and accusations in Australia that he was needlessly harming relations between the two countries.

Diplomatically, High Commissioner Singh says ‘relations. are broad and mature enough to accommodate positions of the two countries on any particular issue.’ Nevertheless, Rudd’s recent decision to cancel his first prime ministerial trip to India (due to Manmohan Singh’s ill health and the need to see the government’s $42 billion economic stimulus package through parliament) has raised further questions about how much importance he and his government give to relations with India.

Rory Medcalf is not so sceptical, arguing that while the Mandarin-speaking Rudd certainly ‘got off to a bit of a shaky start. it is unfair to say he puts China in a completely different league to India.’ Foreign Minister Stephen Smith and Trade Minister Simon Crean have also been particularly vocal on the need to work closely with India, with Crean championing the signing of a Free Trade Agreement.

As well as the positive noises emanating from Canberra, the naysayers are overlooking the close ties that already exist, particularly militarily. The Indian and Australian navies work closely together through what Medcalf calls ‘operationally focused dialogues and exercises’, and there is nothing to suggest this will change.

India’s restrained response to the Mumbai terrorist attacks in November last year has not gone unnoticed. Although critical of the Pakistani government for not doing more to crack down on terrorist organisations, India realises it cannot afford to spook foreign investors with the spectre of nuclear war, and the resilience displayed in Mumbai itself demonstrates the extent to which ordinary Indians are determined that what Sujatha Singh calls ‘the unpardonable horror’ should not be allowed to deal a fatal political or economic blow to their country.

The X factor in relations between India and Australia lies in the results of the Indian general election due this year, Either the ruling Congress or the opposition Bharatiya Janata Party (BJP) could emerge victorious, plus there is the intriguing prospect of a ‘third front’ led by Kumari Mayawati winning enough votes to govern.

Medcalf calls Mayawati (above) ‘this amazing self-made political queen from the lower castes’, and she has shaken off allegations of corruption to emerge as a serious electoral prospect. Corruption remains an issue at every level in India, but it is not viewed with the same horror as in the West. Booker Prize-winning author and dual Australian-Indian national Aravind Adiga sums it up succinctly: ‘Indians mock their corrupt politicians relentlessly, but they regard their honest ones with suspicion.’

And regardless of who wins the election, Medcalf believes pragmatism will swiftly override populist politics when it comes to international relations. ‘The only way India is going to cut through a lot of these problems – whether it is corruption or bureaucratic inertia or political in-fighting – is with a leadership that is willing to exploit the best and the brightest that India has.’